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U.S Housing Starts Declined by 3% in November 2012

December 19, 2012

According to the latest U.S. Census Bureau report regarding the new residential construction statistics for November 2012, the annual rate of housing starts fell while rate of building permits rose. This report sends a mixed signal as to the progress in the housing market.

Privately owned Housing starts declined in November 2012: the seasonally adjusted annual rate settled at 861,000 compared with the revised rate of 888,000 in October 2012 – this change represents a 3% decrease; conversely, the annual rate for November 2012 was still 21.6% above the November 2011 rate of 708,000.

From the housing starts point of view this is a negative report.

Conversely, in November the seasonally adjusted annual rate of building permits for privately owned housing reached 899,000 – a 3.6% increase compared with October’s annual rate of 868,000. The November 2012 rate was also 26.8% above the rate in November 2011.

This news provides a mixed signal for the direction in the U.S housing market as the housing starts declined while the building permits rose on a monthly scale and yearly scale. From my perspective, of the two, the housing starts are more important when examining the developments of the U.S housing market.

As I have pointed out in the past, there is a supposed lagged (by one day) and negative correlation between the monthly shifts in housing starts and daily changes in gold price; i.e. as Housing starts annual rate fall, gold price tends to rise the following day. Thus, all things being equal, the current fall in gold price might change direction tomorrow. Finally, this news may slightly depreciate the value of the U.S dollar against major currencies.

Current gold price (short term delivery) is traded at $1,666.9 per t oz. a $3.8 increase as of 21:30*.

Euros to US dollar exchange rate is currently traded down at 1.3208 a 0.14% decrease as of 21:30*.